WHAT A LEGAL PERSON SHOULD KNOW WHEN IMPORTING A CAR FROM A NON EAEU COUNTRY TO ARMENIA
The rates of customs duty for cars imported from a non-EAEU state to the territory of EAEU by legal entities will change starting January 1, 2020. The calculation of customs duty depends on the customs value, year of manufacture and engine swept volume of cars. The procedure is carried out according to the rate set by Decision No 54 of 16.07.2012 of the EEC board (as per the relevant codes of the Commodity Nomenclature of FEA), whereas VAT rate is calculated according to the Tax Code. Nature protection tax will continue to be charged starting 2020 - as it does currently - according to Article 171 of the Tax Code of Armenia.
To accurately calculate the customs fees, there is a need to pay attention to the code of the given car in the Commodity Nomenclature of Foreign Economic Activity which will prompt the rate of customs duty set for the year of manufacture and engine swept volume of each car. For example, if a legal person imports a car with customs value of 7800 euro, 2500 cubic centimeter engine swept volume and date of manufacture not exceeding 3 years, customs duty will firstly be calculated to 15% of the customs value, which will make 1170 euros (7800€ x 15%=1170 euros). Then, VAT will be generated as a result of calculating 20% of the customs value and customs duty, composing 1794 euros ((7800€+1170€) x 20%=1794 euros). Nature protection tax will not be collected, since the car is not older than 5 years. Thus, the legal person will be charged a customs fee equal to 2964 euros as a result of adding customs duty to value added tax (1170€+1794€=2964 euros in drams).
In case of calculating the customs duty of cars older than 3 years, the engine swept volume is taken into account. This means that the customs duty is determined from the customs value of the car in the amount of the established percent but not less than the product of engine swept volume and the established percent.
Let us consider an instance where a legal person imports a car with customs value of 7800 euro, 2500 cubic centimeter engine swept volume and date of manufacture of 6 years. Here, a customs duty in the amount of 20% of customs value but not less than 0.44 euro per cubic centimeter of the engine swept volume is established (formula 1. 7800€ x 20%=1560 euros, formula 2. 2500 cm3 x 0,44€=1100 euros). This means that the calculation will be made according to the following formula: 7800€ x 20%=1560 euros, since the amount calculated based on the value rate is bigger than the amount calculated based on the rate established for the engine swept volume.
The value added tax will be 1872 euros as a result of calculating 20% of the customs value and customs duty ((7800€+1560€) x 20%=1872 euros). And the VAT and customs duty will together generate a customs fee of 3432 euros in dram equivalent (1560€+1872€=3432 euros). One should remember to add the nature protection tax, which is 2% in case of 6-year-old car (7800x2%=156 euros). Thus, legal persons will pay a total of 3588 euros in dram equivalent for customs clearance (3432€+156€= 3588 euros in drams equivalent).
For cars with the date of manufacture older than 7 years, customs duty is determined by calculating the product of engine swept volume and the established rate. For example, in case of a car with a customs value of 7800 euros, engine swept volume of 2500 cubic centimeters and date of manufacture of 8 years, 2.2 euros is set per 1 cubic centimeter. Therefore, customs duty will be 5500 euros (2500cm3 x 2,2€=5500 euros), and a customs fee of 8160 euros in dram equivalent will be generated alongside the customs duty (5500€+2660€=8160 euros). Nature protection tax of 2% will be added to this (7800€x2%=156 euros). As a result, the legal person will pay 8316 euros in dram equivalent for the whole customs clearance (8160€+156€= 8316 euros in dram equivalent).
By the way, the customs value of a car is determined according to chapter 5 of the Customs Code of EAEU.
It is important to know that if a legal person imports a car in 2019 and registers the goods declaration instead of transit declaration till December 31 including, the customs clearance will be done according to the rates effective in 2019. The transit declaration is filled in for moving the vehicle from the border checkpoint to an internal customs authority, which is a customs authority where the customs formalities - during which the goods declaration will be filled in - will actually be carried out. The customs fees will be calculated based on that. Therefore, if a legal person imports a car on December 30, registers a transit declaration but registers the goods declaration after January 1, 2020, the new rates will apply.
Click here to watch a video on the new procedure which takes effect starting 2020.